Gold in the Indian market is trading 20 per cent higher than in the international one. Apart from duty and other taxes, the yellow metal in the physical market is trading at a seven per cent premium to the landed cost. In absolute terms, to get a ready delivery of gold, consumers have to spend Rs 2,000 per 10g or over seven per cent per 10g as a premium.

This is happening because official imports are still minuscule and gold is not available. "Whatever supply comes is of recycling of old jewellery," said Haresh Soni, Chairman of the All India Gems & Jewellery Trade Federation (GJF).

He said the Customs department was still raising issues with gold imports and, hence, fresh ones were not landing. One to two tonnes of gold imports early this month were released by the Customs. These were sold to exporters. Two consignments have been exported and now the Customs is saying proof of export of the third has to be given, after which fresh gold for the domestic market will be released.

"Already, after the Reserve Bank of India (RBI)'s restrictions making 20 per cent sale to exporters mandatory, several importing banks/agencies are preferring to stay away from imports," said a senior bullion analyst. In dollar terms, premiums have shot up to $100 an ounce ($30 a month ago).

Some large jewellers are said to be managing gold officially by paying a premium of Rs 1,000 per 10g, though still they have to compete with jewellers getting smuggled gold, the supply of which has increased significantly in three-four months.

The sector is estimating total imports were hardly 10 tonnes in October.

Till last month, smuggled gold was selling at a Rs 400 per 10g discount to the landed cost, but since the premium for the spot delivery of gold has shot up to Rs 2000 per 10g, the smuggled metal has started fetching a premium of Rs 600-700 per 10g instead of discounts.

"Despite higher landed cost, in addition to premiums, organised players like ORRA are marking their cost in line with the market to remain competitive. Very high premiums are not in the interest of consumers and it is necessary that government eases gold import," said Vijay Jain, chief executive, ORRA.

Many smaller jewellers are finding it difficult to procure gold. Soni said, "The festival and auspicious period demand has begun and a third of 10 million artisans have no work today because gold is not available."